) second-quarter letter to shareholders the company said it anticipates annualized demand for the Tesla Model S to reach a point that exceeds 40,000 vehicles by late 2014. That’s a nice number, but how did Tesla arrive at it? And is it realistic?

Model S. Source: Tesla’s official Twitter page.

The math behind 40,000
The reasoning for 40,000 vehicles is based on some very elementary assumptions. As the company explained in its second-quarter-earnings call, weekly net orders in North America suggest annualized demand at a rate of about 20,000 vehicles per year. In Europe, Tesla expects annualized demand to be half as good as it is in North America. The other 10,000 will come from “China and the rest of Asia and other countries.”

As we’ll see, however, these estimates may be too conservative. Let’s take a look at each region.
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